29 September 2006

Wal-Mart to enter Mexican banking business

Away from the fuss raised by supporters of Andres Manuel Lopez Obrador, who invaded Mexican Wal-Mart stores earlier this week to protest supposed voting pressure exerted on employees, the retail giant announced plans to enter Mexico's banking banking industry. The move could shake up a rather staid industry that many Mexicans distrust - and in the case of Lopez Obrador and his supporters, absolutely loath - and whose services are often hard to access due to tight lending policies and sky-high fees.

For Wal-Mart the extension appears natural. It has more than 700 stores and restaurants operating under various brand names, including Bodega, VIPs, Superama and Suburbia. It's also Mexico's largest retailer. Banco Azteca, which offers services in Elektra outlets, could be the model Wal-Mart is copying. (Banks in groceries stores are common in Canada and the U.K.) It could be a welcome alternative to loosely-regulated credit unions, which provide easier terms and can be popular, but risky places to park money. (Witness the spate of credit union closures in Jalisco in recent years.)

As for Lopez Obrador's supporters going after Wal-Mart, the company is just the latest villain in the presidential candidate's charges of election fraud. (And a prime target for the American left in the upcoming mid-term elections.) The company, Mexico's biggest private-sector employer, apparently urged it employees to vote in the July 2 election. And in the view of Lopez Obrador supporters, the company instructed workers to back the conservative National Action Party (PAN). Despite the general "cleanliness" of the election, tales - and rumors - of misdeeds are common.

In PAN states like Jalisco, workers in a number of industries complained of coercion after the election, saying they were told how to vote.

It could work the other way in PRD bastions, too. In Mexico City, rumors abound of vendors being dragooned into pro-Lopez Obrador protests - at the risk of losing their spots in tianguis markets. Despensas, gifted by all parties, haven't disappeared either.

Of course, in the days of one-party rule, unions told members how to vote - and bucking the instructions brought consequences.

While Walmart is foreign, it's new line of business is dominated by non-Mexican players. Scotiabank Inverlat is Canadian owned. Santander Serfin and BBVA Bancomer, Spanish. Citibank bought Banamex in 2001 - a deal PRD supporters want to see reviewed, and with some justification considering the unseemly Fobaproa bailout. HSBC is British. About the only 100-percent-owned bank left in this country is Banorte.